How to Survive the Sudden Loss of a Grant

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Written by Alex Comfort, CFRE

Losing a grant with no warning can be disastrous for a small nonprofit. Fortunately, it’s possible to make up at least some of the funding.

Don’t take that to mean it will be easy. It will take commitment and work from your organization’s leadership.

Many nonprofits become “grant dependent,” especially when the same grant has been awarded year after year. But as funding priorities change, grantors may choose to award money to another program, or a government grant may not be appropriated in a budget.

That’s why it’s vital to maintain an appropriate funding mix so your organization isn’t dependent on one type of funds. Your funding mix should include:

  1. Annual Fund (including fundraising from special events)
  2. Major Gifts
  3. Endowments
  4. Planned Giving
  5. Earned Income

Annual Fund

Your annual fund is comprised of smaller, yearly gifts that fund your core programming and usually come from a donor's disposable income. 


Endowment fundraising goes to targeted funding which, in time, should yield 5% or so in yearly payments. But it’s not a replacement for grant funding. 

Planned Giving

Planned Giving almost always comes only when the donor passes away. Again, since you never know when you might receive a gift like this, it’s not an adequate replacement for a lost grant.

Earned Income

Earned Income is some sort of business enterprise that is related to your mission (but doesn’t necessarily have to be). Many of these ideas come through your board. You may spend some capital to establish them, and like any small business, it takes time for them to grow and provide consistent funding. Once again, this does not normally help right now when you have lost your grant.

So that leaves Major Gifts as your real opportunity. As a consultant, I spend most of my time talking about and helping non-profits establish a working major gifts program. You need to identify:

- What a major gift is for your organization. Most small- to mid-sized non-profits use $1,000 and over as their level. Major gift donors require a lot of time and attention from your organization’s executive director and development staff. Determine your top 50 – 80 biggest donors and look at it from that lens.

- A few tangible, needed projects for which you need funding. You may need a van that actually runs. Or a back entrance to your old building that is required by code. Or even a short-term project that will enhance your public image.(Remember: the main reason nonprofits do not success in major gift fundraising is that they do not present major donors witha  compelling, urgent need to address!)

- An accurate goal of what you need.

- A time period of six weeks to solicit major donor gifts. I like mid-September to the end of October, after your annual fund campaign and before your end-of-the-year giving push.

- A committee of three-to-four major donors to help your staff approach major donors about your needs.

- A strategy of contacting the donors. IN PERSON!!! There are things you can do by email or through the mail, but these 50 or so donors deserve and need some personal attention for this important project.

- Enough time from the executive director to be the perceived and apparent lead on this process.

- Commitment from the board to accomplish the goal you set.

Then go do it.

If I’m a bit short on specifics on how to accomplish this, it’s because I don’t know your need and your donor base. But if you follow these steps, you can make a dent in the $50,000 or $250,000 you need to offset what you lost.

Want more help on the development front? Our Quick Start Guide to Development Planning will help.

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